Starting a call center can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful call center.
Importantly, a critical step in starting a call center is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Call Center:
- Choose the Name for Your Call Center
- Develop Your Call Center Business Plan
- Choose the Legal Structure for Your Call Center
- Secure Startup Funding for Your Call Center (If Needed)
- Secure a Location for Your Business
- Register Your Call Center with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Call Center
- Buy or Lease the Right Call Center Equipment
- Develop Your Call Center Marketing Materials
- Purchase and Setup the Software Needed to Run Your Call Center
- Open for Business
1. Choose the Name for Your Call Center
The first step to starting your own call center is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your virtual call center:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your call center.
2. Develop Your Call Center Business Plan
One of the most important steps in starting a call center is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your call center.
- Company Overview – this section tells the reader about the history of your call center and what type of call center you operate. For example, are you an inbound call center, an outbound call center or a blended call center?
- Industry Analysis – here you will document key information about the call center industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your call center? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day call center operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your call center make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Call Center
Next you need to choose a legal structure for your call center and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the call center and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a call center together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a call center include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a call center is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your call center, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Call Center (If Needed)
In developing your call center business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a call center to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a call center that they believe has high potential for growth.
5. Secure a Location for Your Business
When looking for a location for your call center, there are a few key things to keep in mind.
- Evaluate your needs. What type of call center do you need? Do you need a domestic or international call center? What features do you need?
- Research the options. There are many call center locations to choose from, and each has its own strengths and weaknesses. Do your research and find the best option for your business.
- Consider your budget. Call center locations can be expensive, so make sure you have a clear understanding of how much you’re willing to spend.
- Contact the call center location. Once you’ve found a location that meets your needs, contact the call center to learn more about their services and pricing.
- Get started. Once you’ve found a location and service provider, you can get the ball rolling and move forward with your project.
6. Register Your Call Center with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your call center’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your call center to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
Depending on the type of call center you want to start, you may need a variety of licenses and permits. For example, if you plan to offer customer service or technical support, you’ll need a business license from your local government. You may also need a permit to operate as a telemarketing business, and you’ll definitely need a Federal Trade Commission (FTC) Telemarketing Sales Rule (TSR) registration. To learn more about the licenses and permits required to start a call center, contact your state or local government business licensing agency.
10. Get Business Insurance for Your Call Center
The type of insurance you need to operate a call center will depend on the type of business you are running.
Some business insurance policies you should consider for your call center include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Call Center Equipment
You will need a computer terminal for each agent, headset, business phone system, and a reliable internet connection.
12. Develop Your Call Center Marketing Materials
Marketing materials will be required to attract and retain customers to your call center.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your call center. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional call center website provides potential customers with information about the call center services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your call center.
13. Purchase and Setup the Software Needed to Run Your Call Center
The virtual call center software needed depends on the size and type of your call center. For a small call center, programs such as Skype or Google Hangouts would work. For a larger call center, a more robust system like Avaya or Cisco would be needed.
Other types of software that are necessary include:
- Customer Relationship Management (CRM) Software: This software helps to track customer data and interactions. It can help to identify opportunities for up to cross-sell and upsell products and services.
- Telephone System Software: This software helps to manage phone systems and phone lines. It can help to automate tasks, such as routing incoming calls to the correct agent, and saving voicemails.
- Desktop Applications: These are built to improve agent productivity. Desktop applications can provide call center agents with reference lists, data entry assistance and language translations.
- Web Based Applications: These help to streamline processes and automate tasks, such as updating customer records in real time.
14. Open for Business
You are now ready to open your call center. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Call Center FAQs
Is it hard to start a call center?
No, it's not hard to start a call center, but it does require perseverance. You would need to find the right people to hire for your business, train them, and make sure they are productive.
With the right planning and execution, it is possible to create a successful call center.
How can I start a call center with no experience?
First, you'll need to research the industry and learn everything you can about the call center process. You'll also need to create a business plan and funding proposal. Once you have all of this information together, you can start looking for investors or partners who can help you get your call center off the ground.
What type of call center is most profitable?
There are many types of virtual call centers, but the most profitable are usually the ones that provide customer service. In general, inbound call centers are more profitable than outbound call centers. This is because inbound call centers typically require less manpower and have lower overhead costs, while outbound call centers require more personnel and often have higher marketing expenses.
How much does it cost to start a call center?
The costs involved in starting a call center can vary depending on the size and type. You will need to factor in costs for office equipment, phone lines, customer service software, office space, and employees. On average, it can cost anywhere from $10,000 to $50,000 to start a call center.
What are the ongoing expenses for a call center?
Some common ongoing expenses for a call center include:
- Telephone service
- Internet service
- Computer hardware and software
- Office supplies
- Employee salaries and benefits
- Rent or lease payments
- The cost of utilities
How does a call center make money?
A call center makes money by charging clients for the services it provides. These can include charging by the minute for customer calls, charging a set fee for a certain service, or receiving a commission on sales that are generated as a result of calls made by the call center.
Is owning a call center profitable?
Yes, there are many reasons owning a call center can be profitable. One reason is that call centers can provide a wide range of services, which allows them to target a variety of markets. Additionally, call centers tend to have low overhead costs, and they can be run from home or a small office. This makes them an attractive option for entrepreneurs who are looking to start their own business. Finally, the use of technology has made it easier than ever for businesses to outsource their customer service needs to call centers, which helps keep costs down.
Why do call centers fail?
There are many reasons call centers fail. One of the main reasons is that the customer service representatives are not adequately trained to deal with the public. They may not have the proper knowledge to answer customer's questions or they may not be able to resolve complaints in a satisfactory manner. This business may be poorly managed and have inadequate resources, which can lead to long wait times for customers and frustration on their part.